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Determine Passive Activity Loss Rental Property – Paul Gaulkin CPA

house with for rent sign

An activity is a rental activity is during the year: 1. Tangible property held in connection with the activity is used by customers or is held for use by customers; and 2. Gross income attributable to the conduct of the activity represents amounts paid principally for the use of the property. Generally speaking, any rental activity is a passive activity, without regard to material participation. This means that no matter the amount of hours you put into a rental activity, … Read more

Definition of Section 1245 Property – Paul Gaulkin CPA

personal writing financial statements

When you think of Section 1245 property, you should really be thinking of Section 1231 property. Section 1245 is actually a subcategory of depreciable Section 1231 property. Section 1245 property is personal property which is subject to depreciation or amortization depending on the type of property. This definition includes property such as: 1. Property that is tangible and was used as an integral part of a specified business activity or activities. 2. Amortized property such as patents and leaseholds of … Read more

Like Kind Exchange Qualifying Property – Paul Gaulkin CPA

night time office complex

A like kind exchange is an exchange of investment or business property that qualifies for non recognition of gain or loss. The main reason that the taxpayer does not have to recognize any gain or loss is because it is assumed that they will be in the same economic position after the exchange is completed. Qualifying Property Qualifying property for a like kind exchange must be held either for productive use, in a trade or business capacity or as an … Read more

Qualified Personal Residence Trust – Paul Gaulkin CPA

Home with sign saying welcome

A qualified personal residence trust gives a taxpayer a straightforward way of removing the value of a personal residence from an individual’s taxable estate. Qualified personal residence trusts are useful in situations where an individual would like to transfer their personal residence to family members at some point in the future. Qualified Personal Residence Trust A QPRT is generally only allowed to hold a personal residence and no other assets. In some cases, there are flexible QPRTs that will allow … Read more

Minimizing Gain on Home through Basis Adjustment

The front of a home

When a taxpayer sells a house, they have the opportunity to take a capital gain exclusion up to a certain amount of the gain from selling the house. In the situation where the gain actually exceeds the exclusion amount, the taxpayer can add home improvements and expenditures to the basis to try to minimize the gain. It is extremely important that you keep all your documents that involve buying and improving a home. If in the future you decide to … Read more

Buying Real Estate In USA As A Foreigner

Do you live outside of the United States and thought about buying property in the USA? You can and we will explain the process and some tax issues to look out for. Buying Real Estate as a Foreigner If you’re buying property simply as an investment and that investment generated income, you will be subject to taxes in the United States at the state and federal level. In addition to this there will be United States tax liabilities that will … Read more

Audits Over New Real Estate Tax Law

The IRS continues to batter real estate professionals with audits for things that have already been changed in the tax law but have not been updated in the guide that an IRS officer would use to conduct an audit. Real Estate Tax Law Audit The guide that the IRS officer uses to audit a taxpayer is called an Audit Technique Guide; a large portion needs to be updated to fix the problems that are occurring within the audit process. Below … Read more

How To Deal With The IRS When You Have Real Estate Problems

Online, on the radio, and on the television, we’re all exposed to headlines expressing today’s depressed real estate market, as foreclosure rates grow sharply. Aside from a failing economy, there are two tax trends that have come to light. Form 1099A & Form 1099C Even for those who are going through foreclosure or those who have filed for foreclosure years ago, lenders are still foolishly sending out Form 1099As as well as Form 1099-Cs. In fact, if a homeowner fails … Read more